Here are the five key takeaways from the Fed meeting and Powell news conference

The recent Federal Reserve meeting held on Wednesday provided a mix of expected outcomes and surprising developments. Here are the key highlights from the meeting:

1. The Federal Open Market Committee announced a quarter percentage point rate cut, meeting market expectations. However, the decision was not without its share of drama, as two members dissented in opposite directions. Governor Stephen Miran voted against the cut, advocating for a larger half-point reduction, while Kansas City Fed President Jeffrey Schmid opposed any rate cut, representing a group concerned about the Fed’s easing bias.

2. Fed Chair Jerome Powell took a firm stance against another rate cut in December, despite market expectations suggesting a high probability of such a move. Powell emphasized that the decision was not a certainty, citing significant differences in opinions among the 19 meeting participants. The minutes of the meeting, to be released in three weeks, will reflect the varying views expressed.

3. The committee put an end to quantitative tightening (QT) by announcing that asset roll-offs from the Fed’s $6.6 trillion balance sheet would cease after the November operations. This move, along with the reinvestment of maturing mortgage notes in short-term bills, will shift the balance sheet towards shorter durations, with a heavier emphasis on Treasurys.

4. Powell acknowledged that inflation is approaching the Fed’s 2% target but remains slightly elevated at around 2.8%, partly influenced by tariffs. He reassured that the impact of tariffs is expected to be temporary. The government shutdown has disrupted data releases, with the Commerce Department not providing an official inflation figure for October.

5. Despite the uncertainty caused by the government shutdown, Powell maintained that the economic outlook remains consistent with moderating growth, increasing unemployment, and slightly elevated inflation. Although some key federal data releases were delayed, both public and private sector data indicate minimal changes to the economic forecast since the September meeting.

In response to the meeting, various experts shared their perspectives:

– Dan North, senior economist at Allianz, highlighted Powell’s strong dismissal of expectations for a December rate cut.
– Rick Rieder, head of fixed income at BlackRock, suggested that a rate cut in December may not be imminent, potentially delaying further accommodative measures into the new year.
– Heather Long, chief economist at Navy Federal Credit Union, expressed her belief that a December rate cut is still probable, as Fed leaders aim to prevent a slowdown or recession.

Overall, the Federal Reserve meeting provided insights into the committee’s decision-making process and the factors influencing future monetary policy actions. The market will closely monitor economic indicators and Fed communications for clues on future policy directions.